Construction and renovations put GWA on record path

Construction activity and ongoing renovation work are driving GWA International towards a record profit for 2003-04, with the building products company yesterday booking a 10.7 per cent jump in first-half net earnings.

GWA, with businesses such as Caroma and Dorf Clark bathroom accessories, reported a net profit of $31.55 million for the half-year to December 31.

The company said it was on track for a record profit of close to $60 million for the 2003-04 year.

"This profit growth [is] being driven by the high volume of domestic construction to be completed in the second half and the continuing strong operating performance across the group's businesses," it said.

GWA declared an interim dividend of 10c per share, fully franked, compared with an interim dividend of 7.5c and a special dividend of 2.5c a share previously.

Managing director Peter Crowley said the continuing strength of the construction and renovation sectors were driving profit growth in the building fixtures and fittings segment.

"However, there are signs that recent high growth levels have peaked," he said.

"Our brands and market positions and continuing business efficiencies coupled with the buoyant renovation sector continue to support our bottom line results, which we expect will achieve another record for the 2003-04 financial year."

The building fixtures and fittings segment was expected to be the main driver for GWA International to post growth of close to 10 per cent for the full year.

Mr Crowley said that in the longer term the principal driver of demand in the domestic market would be renovations, which would continue to boom as more people bought new kitchens and bathrooms, and as homes aged.

Immigration would also ensure continued demand, he said.

"A softening of dwelling activity is expected from 2004-05, however there is a continuing high level of underlying demand for housing," the company said.

GWA said the appreciation of the Australian dollar against the US greenback had been a minor net positive for the group.

"However, if this significant appreciation is sustained, the cost of competitiveness of the group's local manufacturing activities will progressively lessen into the longer term," it said.